There may be errors in spelling, grammar, and accuracy in this machine-generated transcript.

Katie : Welcome to the Best Metrix podcast. Each episode, we meet with industry experts to discuss how they evaluate financial statements, what metrics they commonly use, and how their clients have improved. We'll also gather suggestions of how you can incorporate the same insights and processes into your own practice. Thanks for listening and enjoy this episode.

Glenn Dunlap: Well, welcome to another [00:00:30] episode of Best Metrix podcast where we're excited to to get this kicked off. Today, we're diving deep into the financial metrics that matter most to real estate agents. In an industry where income can fluctuate dramatically and business expenses can easily spiral. Understanding key financial benchmarks is critical to their success, so navigating these challenges effectively can be the difference between thriving and just getting by in the competitive real estate world. To help us unpack real estate agents and [00:01:00] how not unpacking real estate agents, but how to how to unpack how real estate agents can overcome these financial hurdles. We're joined by Michael Altman. Michael, welcome to the podcast.

Michael Alliman: Thank you very much. Very nice to be here.

Glenn Dunlap: Yeah. Great. Well, Michael is the founding partner of Altman Business Group. Michael specializes in providing Keller Williams agents and teams with Emory based financial statements designated to help them maximize their profitability by focusing on sound financial planning. Michael and [00:01:30] his team help agents not only fund their business goals, but also support their personal financial aspirations. Michael holds a master's degree in accounting from the University of Tennessee in Knoxville and Bachelor's in Business Administration, with a major in accounting from Baylor University. With a passion for small business, Michael launched a management consulting firm in the mid 1990s focusing on startups, turnarounds and business growth. However, it was in 2018 that he founded Altman Business Group. Abg has experienced rapid growth since its inception, [00:02:00] thanks to word of mouth referrals from satisfied clients. Michael, we're excited to have you on the show today and, you know, looking forward to talking about this, this topic. But do you mind sharing a few things about, um, you know, more about your, your firm and the things that you're working with?

Michael Alliman: Sure. Yeah. Uh, thank you very much for having me. The, uh, we, as you said in the introduction, I, I had a management consulting firm that I, that I was dabbling in for several years before. Um, in 2018, [00:02:30] I just decided that I was going to go full time into, into trying to take everything that I've learned in my career and help other people with it, as I had been helped along the way as well. So that was kind of the motivation. Um, I happened to stumble into this particular niche because I was talking to someone who is a coach within Keller Williams, the maps Coaches, and she was complaining to me about how their. Her clients [00:03:00] didn't have financial statements at all or or or they weren't in a format that was usable as Excel spreadsheets. And here's my bank statements and things like that. And so, uh, Gary Keller of Keller Williams with a partner wrote a book called The Millionaire Real Estate Agent, which is Mr. E, and that book is more like a handbook than a novel. It, it it emphasized the importance of knowing your numbers, [00:03:30] and it even has in the back of it, for example, chart of accounts that they suggested that you use. So I, I went through that book, I called her back and I said, this is great, but there's not an accounting firm in the world that's going to do this because it's a very specialized chart of accounts and an incredibly inefficient to use because there's so much detail in it. And, and I said, so I could do this if, if this was my only clientele and I said, so, is the marketplace big enough [00:04:00] to support them? And she says, well, there's 147,000 Keller Williams agents. Is that enough? Yeah.

Glenn Dunlap: Let me think about it.

Michael Alliman: So I stood corrected, and so I jumped in and she gave me a client, you know, one of her coaching clients. And and we started and it was exactly what she was looking for. So she started sending other clients to us, and those clients started telling other clients [00:04:30] about it. So we never spent a nickel on marketing. And we've grown from zero to, you know, we're over 100 clients now and that's that's constrained by our desire. There's only two of us at our firm, just me and my partner, and and we we produce monthly for them and that format. Oh that's.

Glenn Dunlap: Great. So everybody's using the same standard chart, a standardized chart of accounts, and then you're able to to work with them and help them [00:05:00] understand what the numbers are saying then.

Michael Alliman: Exactly. And there's key metrics that they're looking for that we produce for them and supply to them each month.

Glenn Dunlap: So let's talk about this a little bit. You know, think about probably most of us have bought a house or been involved with, you know, even if our parents have bought a house or something like that and you sort of get a feel for what's happening there. Um, you know, even when you're excited about buying a house, you got to go sit down at the, you know, title company and sign a your arm away. [00:05:30] Yup. You know, for all those things. So, you know, you get involved, at least in some part of the in part of this process. But so thinking about from an there's an agency usually these agents are working for an agency and then they've got their own or they own their own separate individual businesses. In all cases. Some of them are employees for for the agency. Or how does this work typically.

Michael Alliman: No, that's a great question. Every single real estate agent out there is an independent contractor working under the brokerage of. [00:06:00] It could be Keller Williams. It could be, um, you know, a million different compass is one better homes and gardens. You see them all over the place and and so it's the brokerage that they are 1099 employee under that particular banner. Okay. But each one of them then is a business owner. Each agent has their own business because they have their own expenses and things like that. So the, the the nice part is because they work for a brokerage, the reporting that we get from the brokerage [00:06:30] is fairly standard. It's just whether or not you know how to interpret all those documents to produce a financial statement out of them. So there's every every transaction has a gross commission amount. So, you know, people get stuck in people's heads. You know that real estate agents charge 6%. So if you have $100,000 home. I wish. Then the the. Then the commission will be 6000. And that is the starting place. And then generally speaking, [00:07:00] that goes to the brokerage which then calculates how much of that the agent themselves will get. They, they back out certain cost of sales, as we call it. And then the the agent ends up with a deposit in their checking account. So not unlike a paycheck. It's a gross amount in a net amount. And our, our job is to capture the difference between those so that we can give her or him a true gross margin. And then from there, they have [00:07:30] their expenses, their individual expenses. That may be one agent, that may be a team of agents that all work under one umbrella. So. So as an agent, I could have a company called Holloman Real Estate, and I may have several agents that work on my team with me. And then employ W-2 employees. So I have several just single single person clients that they're just that's all they do. Just them on their team. And I have huge [00:08:00] client clients with 50 agents that all work under under that umbrella. So yeah. Okay.

Glenn Dunlap: And so there's still that 50 person team is still getting a statements that are coming from the brokerage that then they have to break down and put in their own financials and, and then keep track of the who gets what commission or what gets, you know, what costs. Go where.

Michael Alliman: Right. And it's that's the simplest version. You can get really complex from there. Yeah. Yeah. Yeah.

Glenn Dunlap: Well that's interesting. That's interesting. I think, uh, you know, [00:08:30] the, the perception is until you start to dig into it, that that 6% or 3%, if you've got two, you know, two agents involved in the deal or whatever, that, that, that is going in their back pocket, that that's their closing, you know, at the end of the day. So, uh, so that's but, you know, you know, that that's not the case. So. So let's talk about so you get the the reporting comes from the the brokerage. Now you've got it on the financial statements. And you're looking at those statements. So what are the things that that that you're paying attention [00:09:00] to when you look at the financial statements for real estate agent. Are they sort of traditional financial statements I assume, but then they're also like, you know, what are your eyes drawn to when you're looking at those statements?

Michael Alliman: Uh, well, the very first thing that we look at because because it's preached in the MRR book is there's three there's three percentages that we look at the percentage of cost of sales to total income. Okay. The percentage of total expenses to total income. And then obviously the third percentage is the net profit. [00:09:30] And the goal is always we call it a 30 3040 split. So 30% no more than 30% gross. I mean, uh, cost of sales, no more than 30% expenses leaving 40% net income. Nobody hits that. But that's that's the guiding principle. Um, then underneath that, this is where it starts to get analytical. And this is where it appeals to my brain, because I'm more of a cost accountant than anything else. But is [00:10:00] the you're one of us? Yeah, yeah, yeah, I love spreadsheets. Give me spreadsheets. Um, because every agent has the ability to have both what we call listings or which is representing the seller or, or buyer sales. And there's it's having listings are much more profitable than, than representing a buyer. And that's [00:10:30] mostly because of the time involved. And so I track for them their listings versus their sales. Um, they spend money on listings, expenses that they don't. If it's on a from a bio represented thing. So they have the photography and the and the you know they may hire a landscaper for them. The staging you know. So there's there's a lot of expenses that are involved with the listings. But the difference is, is I try to explain to my clients, especially [00:11:00] newer ones are new to the profession, is that the listing means that your sign is in the yard, there's a Keller Williams or A or whatever realty sign in the yard that's got your name and number on the bottom of it.

Michael Alliman: So every agent in that area is now working for you, because if they can find a buyer for that, that's right. Regardless of which agency they work for, then they're all working for you. So your time involved is less with a listing. Once you get the listing, [00:11:30] you don't have to spend time bringing people over and things like that. All the other agents in town are doing that. So my as I have shown them mathematically, they they will make more money ultimately with more listing sales than than buyer represented sales. Which sounds logical, but it's until you see it on paper. Because one of the things that I love about working with real estate agents is that they are real estate agents, which means they're really good at sales, [00:12:00] which generally means they're not so good at details like numbers. Um, so having been in business and worked in huge industries for a long time, I know that a great salesperson is invaluable as long as you don't give them any responsibilities for details. You know, and I love that. Yeah. So that's where I come in. I'm the detail guy. That's what. That's what I tell them. And and my job is to have them never have to worry about what [00:12:30] I do because I, you know, I sit in a perfect world. We could talk twice a month, like, I'll have some questions each month and you answer them, and then I'll send you your financial statements each month. And that in a perfect world, is how it works. I wish it worked like that. Right. Yeah.

Glenn Dunlap: It doesn't always work. So let's let's go back to you mentioned the 3030, 40 setup. So let's talk about that PNL and what typically is real estate agent putting in their cost of sales.

Michael Alliman: Well, as again, as [00:13:00] I have to explain to them, because anything that has any cost that gets generated as a result of that transaction closing. So for, for example, um, for most agencies, regardless of who they are, they, they pay a what we call a cap, which is it's shared commission with the brokerage. This is how the brokerage makes money. So usually there's an annual amount that they have to pay in that is a percentage of their [00:13:30] commissions or gross commissions. So uh, so we'll track that. They wouldn't have that expense if they didn't sell that house. So, so let's just say 10% of, of their gross commissions goes back to the House until they've paid in $20,000 for the year. So that's a cost of sales. Um, often they will hire a transaction coordinator, which is the person that does all those documents that you had talked about and make sure that they flow through properly, that they have all the numbers in the right place. Uh, that they go to the [00:14:00] title agency properly and that the numbers are finalized. And so that's a cost of that, of doing that sale. And then there's other things they may have to pay a concession to get the deal closed. So for example, you know, the buyer says I'd take it if they'd replace that microwave. And the agent says, look, I'll just replace the microwave for you because it's worth $300 for me to earn the commission. So so that's a cost of that sale. So it's things like that that [00:14:30] are generated because of the commission is earned. Okay.

Glenn Dunlap: That makes.

Michael Alliman: Sense. The other I'm sorry to interrupt myself, but the other potentially large thing is that often, as you had mentioned, they will have what they call an agent split. So I may be the listing agent, but and you're on my team and you bring the buyer or I mean, yeah, you bring the buyer and and and to that listing and make the sale. Well, [00:15:00] I'm going to split part of my commission. I'm going to give to you because you did all the work. And so that's also a cost of sale. Okay. Doesn't happen unless that transaction closes.

Glenn Dunlap: Yeah. That's right. Okay. That makes perfect sense. So the state's aiming for 30%. You mentioned that doesn't hit the 40%. Where do they normally fall short in this? In the cost of sales or in the opex.

Michael Alliman: Opex. Opex is usually way more than 30%. And and unfortunately not unfortunately. But often their [00:15:30] cost of sales is lower, which indicates to me this is where the numbers become narrative. That indicates to me that they personally are spending too much time with buyers. Because. Because if you think about it, I don't know how. And to my prior life we go to buy a house. My wife would would call an agent and say, these are these are the things we must have in this area, in this price range. And I'd like to take the next three days and have you drive me around [00:16:00] showing me those houses, which is great, except that's 24 work hours. Yeah, right. That they're going that they're investing in getting this one sale as opposed to if it was a listing, then some other agent's doing that for them. And they, they get those 24 hours back. And so if their cost of sales is low, that usually indicates to me that the principal that the that the lead agent is spending too much time driving people around, that she'd be better off. I keep saying she [00:16:30] because most of my clients are female, but they'd be better off hiring somebody to take people around rather than spending that time themselves because the, you know, when we I will break down their annual numbers for them and say, look, if you work a normal, you know, 40 hour week and you made this much money last year, then this is what you're taught in the time value of your money per hour is. So if you're if your earning potential is $150 an hour, then for every three hours [00:17:00] you spend doing non income, producing things like driving people around, is is money left. It's it's an opportunity cost which I don't use those terms. But since we're talking here yeah I try not to use the jargon when I'm talking to them but.

Glenn Dunlap: Right, right. But they can understand, you know, their compensation per hour. If you start to take those and divide by, you know, a much higher number of 24 hours versus, you know, two hours to listed [00:17:30] or whatever the numbers are, then that that certainly makes, uh, the math starts to math in your head.

Michael Alliman: Yeah, it's the same argument I use when I'm talking to them initially, when they haven't had a bookkeeper that, you know, their their spreadsheet does just fine. I said, but if you spend it two hours a month doing that, then that's two hours that you're not selling. And that's if you make $150 an hour, then two hours is about 300 bucks [00:18:00] is about what I'm going to charge you each month. So you get those two hours back and you can make more money by we call it leverage. You know, leverage you time. Why spend time doing something you could pay somebody to do that would have a return on investment?

Glenn Dunlap: Yeah for sure. What are they. What are the things that you see them put into the operating expenses. What are their typical operating expenses?

Michael Alliman: Well, a lot of advertising and marketing, obviously they're always marketing. Um, and there's, [00:18:30] there's lots of that. The really successful ones will will create what they call community or client events that will bring, you know, it'll be a reward to to clients that they've had, that have, that they have sold a house to or for. And now they'll have big marketing events where, you know, they invite people. I just got invited to one in Orlando, some big, huge Halloween thing. Um, that obviously I'm not going [00:19:00] to because I'm not in Orlando, but, um, you know, things like that. Photography, um, they do a lot of social media things. They have a lot of them. The bigger ones have social media managers now and things like that. But then there's just the typical things, too. A lot of printing brochures, um, there's, you know, fuel, gas, food. They're always taking people to lunch and, and dinners and things like that. So it's a typical business expense. The [00:19:30] most atypical things are the very specific real estate based, either CRMs or other software items that they use lead trackers. Um, you know, a lot of them spend a lot of money just trying to generate leads. That's a huge part of their cost is lead generation, because they always have to keep the the portfolio full of potentials, obviously. Right. Right. And and a lot of them will spend money on, on [00:20:00] what they call inside sales agents who basically take their lead list and just make phone calls all day long, whether it's to somebody like me, they might call and say, hey, we've got somebody that would like to buy a house like yours. Are you interested? Um, to, you know, to the other side of just hey, we've got houses for sale. In the past, you said you were looking for this kind of thing. Are you interested? But they paid for that kind of work, so.

Glenn Dunlap: Sure, sure. And it's probably you mentioned the difference between [00:20:30] the listing sales and buyer sales. I mean, it probably takes both to get, you know, the other, right? I mean, if you if you don't have a bunch of listing agents, you're not listing listings. People aren't going to know your name, not going to be in front of things. And then, you know, that's going to also drive the buyer side for you, that people are going to walk in and see your name and want to either call about that house and get an opportunity to represent them to buy and other things. I mean, it's it's it all becomes this one big picture that they're trying to fit all these pieces in the puzzle.

Michael Alliman: Yeah, absolutely. And if you walk into any open [00:21:00] house, they always ask for your contact information somehow. Either ask you to sign a guest list, right, or whatever, and you become part of the database of their leads, you know, because you might not want this one. But now I know you're in the market and for a house like this. And so, yeah, there's there's lots of lots of activity that goes on there.

Katie : Business owners are surrounded by data but are desperately looking for the insights they need Using benchmarks and industry metrics [00:21:30] can be a great way to start a conversation with your clients and provide the clarity they need. The only challenge is having access to solid metrics for your clients when you need it. That's where our sponsor Purview Data can help. Purview data enables you to turn tax, audit, or client accounting files into meaningful reports and insights by comparing your clients to thousands of other companies within the same industry. Purview data will help you to show your clients how they're doing, how they're doing against their peers, and how they could be doing better. Quickly [00:22:00] connect to apps like Qbo or Xero, or import trial balances from many other applications, and you'll have comparative reports ready in minutes. Go to Purview Datacom to get started and see how you can get back in front of your clients and grow your consulting revenue.

Glenn Dunlap: So if we're talking about 30, 30, 40. So let's assume that we we manage the first 60% well. And we've got the 40%. That's the, you know, the net. Are they most [00:22:30] of these uh, this is going to be the 40%. It's going to be where their compensation, they're either going to take it through distributions or their compensation comes out after that. 3030.

Michael Alliman: Correct. Yes. Yeah. We uh, for the some of them do put themselves on payroll, the bigger ones. Um, we actually dropped that below the line after the met the. Okay, operating income, uh, because we want to see what the business itself does without them, because that's an arbitrary number. They can pay themselves whatever they want. So. [00:23:00] But yeah. Right, right. That's that's the idea is that the 40% should fund them and their lifestyle and their dreams. And that's where we could help them, you know, focus. They have a big program, um, within Keller Williams called Life by Design. And it has them kind of forecast first, do a personal budget and then a dream budget. Like if you want to retire this our kids in school or you want to take that vacation to Rome or whatever it happens to be, and let's [00:23:30] cost it out and see what it's going to take to fund that. And that'll be how we're going to create the synergy or the strategies for your business and your business growth. Because ultimately we want to fund everything that you want to do. And we'll back into that number for the business, what it would, what it would need to look like. So okay, life by design is do you are.

Glenn Dunlap: You finding that so within the 30, 30 and 40? Let's take opex as a for instance. Because there may be some maybe [00:24:00] just I can wrap my head around some of these things you talked about in terms of their marketing and social and all that kind of stuff. Are you finding that there's a that within those that there's a formulas that typically work, that, that say you should be spending 5% of your sales on, on social media or is it just does it depend on the market? I mean, I'm sure there are a lot of different fluctuations and competition, that kind of stuff. But are you finding, even within sight of that 30%, that there are [00:24:30] numbers that you're aiming for?

Michael Alliman: Yeah. Well, yeah, actually we have nine expense categories, operating expense categories, starting with compensation, which is the staff, and then lead generation, which is all the marketing advertising occupancy, which is the the cost of having an office, you know, whatever that is. Um, and then, you know, smaller ones, automobile expenses, insurance expenses and so on and so forth. So there's nine main categories. And within those, you know, we've got it worked out [00:25:00] what percentages look like on on mass, you know, like for example, what is the a company your size generally spending best practices generally spending on lead generation. And that usually comes out between 10 and 11% of total income. Um we're at whereas compensation may be 12% and automobile may be 2%. But [00:25:30] so we provide all that. In fact, I write custom reports for them that show them compared to best practices within that, you know, the database we have, but it is very regional because the, the, the loan agent in Des Moines, Iowa, is not going to have the same base of business as somebody who's out here in Los Angeles, or the average selling price is just so much higher. So the number that we're dividing by, right is so much different. [00:26:00] So we write, we sort of massaged it down. I, I've tried because we have clients all over the United States. We've sort of regionalized some of our data. That's great. And so, you know, from Washington, D.C. up is Washington, D.C. is its own character. It's yeah, it's because because there's so much coming and going, and every election year we'll get so busy in January with the DC clients. Just because one [00:26:30] administration comes in, that means all the other ones move out and the whole new group of people are moving in and it's it's crazy. So they exist on their own. But the northeast, southeast Texas also exists on its own. And kind of the northwest thing, isn't it? California. Yeah.

Glenn Dunlap: Yeah. That's interesting. And it makes sense. I mean, we it's like you go to nationals baseball games and there's nobody that's ever really from Washington, D.C., so it's a transient fan base, you know. Oh yeah. [00:27:00] Yeah. You get fans there for four years, but unlike your Dodgers.

Michael Alliman: Yeah, exactly.

Glenn Dunlap: Yeah. Right. Um, well that's interesting. So. Yeah. Um, so you get the breakdown and you can share that with them. Are you are most of these, um, are you using a specific real estate software? Are you using QuickBooks online or Xero or something like that, or what are you using for most of these?

Michael Alliman: We use QuickBooks online exclusively. Um, and, and because because we're a two person operation, we have to be really efficient. [00:27:30] So we use one chart of accounts, obviously modified by by each client, but one basic chart of accounts we use QuickBooks online for everybody. We use live flow, which is, you know, back end that dumps everything in from from the analytics side. You know, we use that as sort of our, our database. Um, and we, we use that we use that anywhere. We can just shave a couple of points of inefficiency off. Because what [00:28:00] we've done, which is what's I think made it so that we could grow the way that we have, because without that, some of these, some of these software things that we've been able to utilize is which we've seen immediate efficiency gains and, and, and some of them that we've added and so and I mean, we're in a position where we can be pretty selective about the clients that we take on now. And so we, um, require, for example, you know, we we won't take on a new [00:28:30] client that hasn't that doesn't understand the concept of separating their business and personal funds. You know, so we just it's not worth the liability and it's not worth the time, frankly. So we just say thanks. But until you can get that separated.

Glenn Dunlap: Out a little more disciplined. Yeah, right. Yeah. All right. So, so we've focused an awful lot on the PNL. I'm kind of curious. You know, here's here's real estate agents. Do they? How many of them have much on the balance sheet at all for their their their agencies? Yeah. [00:29:00]

Michael Alliman: Uh, very, very little. Yeah. Right. I mean, there's there's a little bit. Well, they all have obviously cash, but there's a little bit and credit card liabilities. But most of them, they don't have any assets to speak of other than liquid assets and hopefully their retained earnings is growing. But yeah, so so much of it is taken out in distributions. You know if they're set up as an S Corp then they'll pay themselves a reasonable [00:29:30] salary. But other than that they pretty much fund themselves through distributions. So we we emphasize creating tax savings accounts and things like that. That's one of the things that value add that we bring. I'm also I'm trained in profit first. And so, you know, I help people understand that not every dollar that comes in belongs to you. It's you know, some of it's already.

Glenn Dunlap: Yeah.

Michael Alliman: Spent it just hasn't left your account yet.

Glenn Dunlap: Yeah yeah, yeah. So [00:30:00] we do we.

Michael Alliman: We encourage them to set up a profit account, you know, just to stick some money in there. That's just for them. Um, and then. But taxes, you know, they're every year we they a lot of them get slammed by taxes. So we make sure that we've at least exposed them to the idea of setting aside a percentage of each commission for taxes for lighters. But we also work in an environment where they have several of them have coaches, like I was talking about before, maps, maps, [00:30:30] coaches. Okay. And and they, uh, we try not to get in front of maps coaches because Maps coaches are a great resource for us, for clients, but sometimes they're they're not particularly well versed financially. They're great at sales. They're great at real estate. Yeah. But but it still comes down to you got to be able to afford it, you know. So the one thing that I do that they never talk about is I have a cash flow statement for each one of my clients, built in light flow that I look at religiously, because [00:31:00] cash is king in that business. Well, in any business. But, um, as you mentioned at the outset, they can quickly things can quickly spiral out of control in real estate. So every time when we went through this last 18 months of like, who's our prices going to go up or down? Where are rates going? Things like that. Interest rates. Right. Right. We've had we've had some that have struggled mightily and some that didn't make it, you know through that because [00:31:30] they're committed to costs are so high.

Glenn Dunlap: Well what are you seeing in terms of, uh, you know, it used to be that you'd have a, you know, an office location and everything was that dedicated that way. You mentioned you're working with 100, you know, or more, um, agencies, like, what are you seeing them trending towards? Are they working back in an office or are they working mostly home and remote, or what are you seeing from that perspective?

Michael Alliman: That's a great question [00:32:00] because it's changed dramatically since Covid. Um, a lot of them moved home and never went back to to the market center, they call it. All of them have a market center where they can go. So, um.

Glenn Dunlap: For the brokerage, is that the market center? Is that what that means? Yeah.

Michael Alliman: Yeah. Yeah. There's where there'll be, you know, in one markets, there may be 50 different agents that are housed out in there. That that's where they get their there's usually a desk for them, you know, phones and things [00:32:30] like that. But that's also where they make their copies. It's just it's kind of like having an office. But most of them now, um, most most of them most of the time are not working out of an office. The bigger teams are only because that's where all their stuff is. Um, but I've got agents that haven't been inside their market center for two years now, which is. Which works fine for a smaller team. Um, and [00:33:00] and those that were well trained in remote work, like my partner and I live on opposite sides of the country. She's in Florida. I'm in Southern California. Rarely are we in the same room at the same time? But we're on Google Meet all day. You know, we're always right. Having meetings and checking in with each other and looking at, you know, when she says, I cannot figure out this payroll entry. You know, she'll just pop it up on the screen and we'll work through it. That sort of thing. Right. So we've we've never had an office and [00:33:30] it's we don't we don't need one in there. And more of the agents are realizing that the office isn't a necessity for them, other than it has meeting rooms and things like that that they can use. But most of them now are no longer in the office. They're still paying for it, but they're not. They're not going to it.

Glenn Dunlap: Does does the does that. It seems like, um, back in the day, if you didn't have an office that it was really that it was sort of a negative, um, perceived negatively [00:34:00] by, uh, you know, prospects or clients. Uh, but it seems like anymore it's just almost expected that you're, you're going to be working remote And, you know, it's just as easy to take a meeting at a Starbucks or, you know, a Panera or something like that as it is to go to a, uh, you know, an office and maybe even more comfortable and people might, might appreciate that more.

Michael Alliman: I think that what you just did is actually the truth. And if you go around now, if you look at most of the if you look at the signs in the yard for, uh, for a listing, you'll see [00:34:30] a little barcode or QR code code. You scan it and that puts you right in contact with them. You call them, they say, hey, I'm just around the corner. Let's be at the Starbucks, you know? So it's really more the expected now that you just meet somewhere locally, obviously for the for the finishing of it, for the, for the documentation, you know, the signing and the checks and all that. You'll go to an office and that's usually at the, at the title agency anyway. Mhm. Yeah.

Glenn Dunlap: Yeah. Let them [00:35:00] take on the expense of that. Right.

Michael Alliman: Even all that can be done virtually. Now the last house that we bought was we did, we did an hour and a half of it at a Starbucks with a representative that was just took us through all the paperwork and stuff like that. We didn't have to go anywhere. I don't even know if they have an office, to be honest.

Glenn Dunlap: Yeah. Well, I think in COVID you had parking lot closings and all that kind of stuff that were happening to where you couldn't go inside. You know, it's crazy. It totally changed. Uh, it totally changed that. Uh, [00:35:30] what are you seeing in terms of, you know, are there other trends that you're that you've noticed within the, you know, over the last I mean, obviously Covid has had an impact on everything, as you mentioned, the real estate market. Nobody knew what was going to happen with interest rates. And that all sort of seems like everybody sort of held on and trying to figure out what was going to happen. Are you seeing other trends? Not necessarily. You know, with with home sales per se, but just within the real estate market itself?

Michael Alliman: Yeah. Yeah. There is one of the trends is that everybody's [00:36:00] just hit a big pause button. You know, there was they didn't hire, they didn't fire. They weren't sure what was going to happen. Um, a lot of the money went to, uh, online marketing. Obviously, you know, which was going to happen anyway, but there's more money being spent on Facebook for marketing real estate now than ever in the past. Um, very, very few banner ads or billboards. It used to be used for billboard agents everywhere. All [00:36:30] that's gone now, it's really become almost personal marketing with with agents. And there's an interesting statistic that I heard. And then I've had proven to me that most people that most people that are going to be buying a house, that they will call the last real estate agent that they ever met. So it might have been a party the night before. That's interesting. I met you there because they don't they [00:37:00] don't have an agent. You know, why would they? Right. So? So the whole practice is to be front of mind. You know, how do you how do you stay? How do you be the one that when they go, oh yeah, maybe I will buy a house or should I call? Oh, Brittany, I remember I met Brittany and she sent us that email, you know, and that's the kind of thing now that the trend is repetitive stickiness, is it something they talk about a lot, staying front of mind, being the last one that they ever, you know, heard from. So there's a [00:37:30] lot of repetitive sort of it's it's kind of like I'm sure it's the same for you. I probably get 20 or 30 texts a day from political organizations, which I just, you know, I put them all to spam, but it's kind of that same thing, just just little reminders, you know, that, hey, I'm still here. And so you'll see a lot of now, um, lifestyle. So you'll see an agent showing her shopping for pumpkins with her kid at the pumpkin patch.

Glenn Dunlap: That's right, that's [00:38:00] right.

Michael Alliman: And that's it. That's the whole ad, but it gets delivered to people at, you know, through Facebook based on zip codes and all that other kind of stuff. So it the trend has become high touch, but without touching it multiple times. Yeah.

Glenn Dunlap: And without it being as so salesy. Right. If you're if you're at the pumpkin patch with your kids, you're not necessarily, you know, trying to sell something there. It's just being top of mind. And back [00:38:30] in front I suppose there's probably some relatability lifestyle, like how do I connect with somebody that if I see that they've, that they themselves have kids and family and all that, there's some, some sort of connection you can make there? Maybe not, I don't know, but that maybe there's some element of that. Yeah.

Michael Alliman: No, I think it's kind of like like anything else. You know, if I see, I see somebody ad like, oh, that's nice that she wants to be a real estate, my real estate agent. But then I see her at the pumpkin patch with her kid, [00:39:00] kind of, you know, pulling on her arm. You know, she has. She's normal, you know, she's just a person trying to make a living. I think that there's an impact to that. I mean, certainly humanizing it. Certainly there's people out there that just want the old fashioned, no, no nonsense. This is how much it is. This is where, you know, things like that. But I think that that as, as my generation, the boomers sort of move out and that the, the next generation moves in it's way more relationship [00:39:30] based than, than it than functional. You know, it used to be I needed an agent because I don't know how to read all that stuff myself. So I'll go hire an agent to help me buy a house. Now it's more relational, you know. Does this make sense? This person's kind of like me, and they sort of get me. It's. It's more touchy feely than than I would be comfortable with.

Glenn Dunlap: Yeah, yeah. So I've read stories about large maybe. And this, you know, tell me if this isn't the direction you want to go, but I'm just [00:40:00] kind of curious if this has had an impact. You see that there, like a lot of these large, um, you know, corporate investors that are buying up a lot of real estate around the country. And certainly that changes. It's not a it's not a personal buyer. It's somebody that's investing with, you know, with the intent of it becoming a rental property or something like that. Has that changed the way that the real estate agents work? I mean, you know, if you've got a property and you think, hey, this is one that I could sell to, who is Blackstone or somebody like that that you could, you [00:40:30] know, if they're if they've got a big property group, does that change the way that they approach this at all?

Michael Alliman: Yeah. Well it does. Most of them resent the big corporate buyers because most of them are cash buyers. And so they they have taken out a lot of their potential clients when at the height during the pandemic, when it was just silly and, and, you know, these cash buyers would come in and, you know, I had a I had a, an agent in Tampa that she had 62 [00:41:00] offers on a home, 60. Every single one of them was above asking. Four of them were cash only, and one of them was cash only one. And it turned out it was one of these corporate investors. But because when you show up with just cash, no contingencies, you know, we'll just we'll take the house as is for over the asking price that it became just silly because there was so much cash out there. And, [00:41:30] and investors saw it as an opportunity to really, you know, double down on, on some of the real estate stuff that, um, that sort of cooled off. Now, there's still a lot of corporate investors out there, but that that wave has, has passed by. But there was, there was agents that were getting calls from the Blackstone's, if you will, that said, look, we want ten homes in this area, in this price.

Michael Alliman: Find them. And and in its time, you know, we don't. We'll send our lawyer, you send [00:42:00] whoever and we'll just do it. So there was some of that that was going on. But that's not the kind of business that you rely on and that doesn't that, again, they're the really successful agents have thousands and thousands of people in their database that they're always cycling through keeping in contact with. Well, you don't keep in contact with the corporate buyer there. You'll never see them again. They don't care who you are. They just care that you facilitated the transaction for them. So it was it made for some weird bedfellows [00:42:30] for a while, but now it's sort of kind of calmed down. It's interesting as rates have kind of clicked down a little bit. It's brought some more people into the market. The thing that is defying all of economics is that the prices aren't coming down, even though, yeah, the number of buyers has slowed down the price and a lot of areas is just kept going up and and even as rates drop, the prices rise. You know so it's yeah.

Glenn Dunlap: Typically you've seen [00:43:00] when interest rates are going up and people can afford less. Then you would see prices come down and you would see sort of that inverse relationship. And that just has not held true. At least I'm in Indianapolis and that certainly hasn't held true here. The rates or the home prices have stayed the same have gone up even with that. So yeah, it's been an interesting, interesting time.

Michael Alliman: It's weeded out some of the weak regions, to be honest.

Glenn Dunlap: Oh interesting. Yeah. So if they haven't, if they weren't able to, you [00:43:30] know, find the clientele or find the listings and, and deal with that. That's it's been an impact on them.

Michael Alliman: If they didn't have the cash reserves. You know we always suggest that they have at least three months of their life, you know, three months of operating expenses and their and their checking, you know, because of happened or doesn't, you know, so yeah.

Glenn Dunlap: Right. Right. Yeah. Closings are not guaranteed. Right. So that's.

Michael Alliman: Absolutely.

Glenn Dunlap: Yeah. Well that's interesting. Do so I you're representing Keller Williams [00:44:00] agents. So those are all home buyers. Those are all personal residential side, not, um, folks that are on the commercial real estate side. Right. Or do they do you have some that do commercial real estate or is it all residential?

Michael Alliman: Um, the agents that we work with are are all residential. They all say that they will also do commercial, but that is a whole different. Yeah. You know, that's a that's a years long sales cycle that most of them couldn't afford. But they all claim that they'll do commercial, which means that, you know, if you [00:44:30] want to buy a little warehouse down on the corner next to the 7-Eleven, they'll facilitate it. But but what you and I are thinking about for, you know, high rise, right, development projects and stuff like that, now, what they may be as as sometimes the agent will associate themselves or partner with a developer who may be building a condominium complex, for example.

Glenn Dunlap: Okay.

Michael Alliman: And they represent the they get every transaction because they're the face of the developer. So [00:45:00] that makes sense. Sort of semi-commercial. Um, but it's not. And just to clarify, we we most of our business is Keller Williams agents, but some of them have left to other agencies and we stayed with them. So we have Exp agents now and others that that just again, they were all they all started. They all followed the same format. If they don't want the format, don't come to us. You know the.

Glenn Dunlap: Yeah. That's right. Yeah yeah yeah. We care about your brokerage. Yeah yeah yeah. [00:45:30]

Michael Alliman: So, so, you know, we built it, and we're very grateful for Keller. And it's still 80% of our business. But it's okay. It's. We have lots of other clients, too.

Glenn Dunlap: So you've mentioned, you know, Iowa and Tampa and other other locations. So you've got clients across the country.

Michael Alliman: Yeah, we've got literally not in every state but in every region, all the way up into Maine, all the way down into Miami and, you know, everywhere up and down the eastern seaboard, several in Texas, we just call Texas its own region. [00:46:00] Um, and then and then from from Southern California up, um, well, all the way up into Boise, Idaho. And then, you know, we've got one in Montana and a couple in Michigan. And so so we have a pretty good, uh, you know, covering of the we also have we have Kansas City and Des Moines and, you know, some of the what some people call flyover country. But but you know, we where we are. Well, which is where I grew up, you know, I, I was born [00:46:30] in Iowa and I grew up in Denver, so. Oh, yeah, we have Denver clients or Colorado clients. So yeah, we've got pretty much a good mix. Um, obviously the bigger cities attract more people, therefore attract more agents. So it's sort of just, just sort of drifts towards larger cities, but it's it's not exclusive to that.

Glenn Dunlap: Okay. No. That's great. Well, Michael, this has been really informative. You know, I've I've enjoyed [00:47:00] this. I think it's a, you know, every time you. You start to sort of peek behind the curtain in any particular industry. There's always something that's just unique to them and, and really fascinating to me to, to, to talk through. So thanks for sharing your expertise today. Appreciate it.

Michael Alliman: Absolutely. Yeah. No. And I listen I learned something new about this industry every week. There's something else that surprises me that's gotta be shitting me. Something else to account for. But. Absolutely. Yeah. You know, and there was the big lawsuit that happened, and they [00:47:30] had to change the way that that, you know, buyers are represented now. And that really put into a tailspin for a while. So now that's changed a little bit. But you know, when it comes down to it, as I said to my clients, ultimately it's just arithmetic, you know, and my job is to get the arithmetic in the right order and the right flow, so that you have documents that can help you manage your company. Absolutely. Most of my clients before they started with us, if they're new to us, they're new to having an agency [00:48:00] or an accountant. And they saw their their financial statements as a report cards. You know, how did you do on the test as opposed to tools to use to manage your business? And so that's kind of what we bring is like not only capturing the data but interpreting it for you. So like what does this mean going forward. So we for example, we had very detailed statements. Every software subscription is listed when you first start with us. And the reason that we do that is because most of our [00:48:30] clients will look at it and go, oh crap, I forgot I was even paying for that. Yeah, over and over and over. Right. The rocket money of.

Glenn Dunlap: Right.

Michael Alliman: Right. Bookkeepers. And we do it for that reason. So people can actually see instead of just advertising. What is what advertising or what?

Glenn Dunlap: Yeah that's right.

Michael Alliman: And so we generally usually save people money right away because they realize that there's stuff that they don't need to be doing or that they're duplicating.

Glenn Dunlap: Well, [00:49:00] it's probably similar. I had, you know, a friend that owns a McDonald's franchise that was doing $2 million and, and he said, you know, people think you're managing millions. And the reality is, is if you don't pay attention to the pennies, you're screwed. So you just you're still managing pennies, even when you've got a $2 million business. And it's the same. I mean, and we do it on a personal level, too. You think, why am I still paying for that? I haven't used that in forever. So it's it's not great attention to the details.

Michael Alliman: The greatest accounting education I [00:49:30] got was long after I was in school, and I was, uh, I was working, I was, I was in the fresh produce processing, you know, the salads in the bag that you have. And and suddenly yields meant a lot because you can be off your yields by a half a percent, and that can cost you hundreds of thousands of dollars in a month. And so that cost accounting aspect, that's what I was talking about before. Yeah. Pennies matter. And if you have any effect over them you can alter them. You know, we [00:50:00] highly suggest that you do because.

Glenn Dunlap: Yeah, for sure.

Michael Alliman: That adds up in the long run.

Glenn Dunlap: Yeah, absolutely. Michael, if somebody wants to get a hold of you, how how would you suggest they do that?

Michael Alliman: Well, you know, I was about to say they could go to my website, but our website's down because we're redoing it at the moment that the best way right now is just to, uh, email us and it's, you know, simple. It's Michael at all. I'm in business. Group.com. Uh, my partner is Amy [00:50:30] and all. I'm in business. Group.com. Um, and we will get the website back up. It is all business. Com but we didn't anticipate this when we started to do the rebrand or not rebrand, we tear it down and building it back up because it was old. But yeah. So for right now, just email is the best way to get a hold of us.

Glenn Dunlap: That sounds good. We'll list those in the show notes and make sure that that folks can find you. And we we really appreciate you joining us today. Like I said, it's been it's been fun. It's been informative for me. And I'm I'm hoping [00:51:00] that, you know, our listeners take that on as well because I think, you know, most of our folks are trying to, um, you know, understand an industry better and, and ways that they can serve their clients. And so I'm sure this has been helpful to them as well. So, yeah, find a niche.

Michael Alliman: Maybe that's what we did. That was that was the secret to success. Fantastic. I'm an expert in this in a small niche. And you can you can write your own ticket.

Glenn Dunlap: Love it. Thanks, Michael. Thanks for joining us today. Thank you. [00:51:30] Ben. Take care.